A record $1.52 billion patent verdict against Microsoft Corp. is certain to provide fuel for computer and software makers in their push to overhaul the U.S. patent system.

The jury award to French networking company Alcatel-Lucent on Thursday (Feb. 22) was immediately cited by critics as an example of why Congress and courts must reduce the leverage that patent holders have over companies like Microsoft.

"This is another sign that our patent system has run off the rails," said Ed Black, head of the Computer & Communications Industry Association, an industry lobbying group.

The federal jury in San Diego concluded that Microsoft had infringed audio patents held by Alcatel-Lucent . Microsoft said it plans to first ask the trial judge to knock down the ruling and will appeal if necessary.

The award was the largest ever in a U.S. patent case and comes at a time when the patent system is being scrutinized by both the Congress and Supreme Court.

"This is one that impacts on everybody that has an MP3," said Stephen Becker, a patent lawyer with the firm McDermott Will & Emery. "It's not only impacting on makers of esoteric technology."

Computer and software makers have argued that the patent system gives too much power to patent holders, many of whom don't sell any products but seek to make money by suing profitable companies and holding them to ransom.

"Microsoft has been on the losing end of patent lawsuits and understandably is pursuing change [in the patent system]," said Stephen Maebius, a patent lawyer with the firm Foley & Lardner. "They're losing under the current rules of the game."

The controversy caught the public spotlight last year when a small patent-holding company nearly got an injunction to shut down Research In Motion Ltd.'s popular BlackBerry wireless e-mail devices. RIM settled the case after a judge made it clear that he would impose an injunction.

That case gave impetus to legislation that has been pushed by the software industry for several years. It would make it easier to challenge and overturn bad patents, and would limit damage awards in cases—like the MP3 case against Microsoft—where an infringed patent covers only a small portion of the product.

Efforts to overhaul the system stalled in Congress last year, in part because of reservations by pharmaceutical companies and other patent-reliant industries.

By: DocMemory
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